ETFs
Hong Kong and Saudi regulators explore pact for financial services and ETFs
Regulators in Hong Kong and Saudi Arabia will explore ways to list exchange-traded funds (ETFs) and promote two-way fund flows, according to the Securities and Futures Commission (SFC).
The SFC said on Monday it was exploring the possibility of signing a memorandum of understanding with Saudi Arabia’s Capital Market Authority (CMA) following the visit of CEO Julia Leung Fung-yee and the executive director Christina Choi last week. The trip included stopovers in Riyadh and Abu Dhabi, the capital of the United Arab Emirates (UAE).
Leung and Choi held separate meetings on Sunday with CMA Chairman Mohammed bin Abdullah Elkuwaiz, Commissioner Abdulaziz Abdulohsen bin Hasan and executives of stock exchange operator Saudi Tadawul Group.
“We look forward to strengthening regional market connectivity with our regulatory counterparts and stakeholders in Saudi Arabia and the UAE,” Leung said in the statement.
Julia Leung, CEO of SFC (second from left) and Christina Choi, Executive Director (left), met with Mohammed Al Rumaih, CEO of Saudi Exchange (center), in Riyadh during their recent visit to the Middle East . Photo: SFC
There is an opportunity to deepen mutual understanding between “our respective financial markets and explore Hong Kong’s role in transitioning two-way capital flows between mainland China and these two jurisdictions”, she added.
The SFC and CMA also discussed ways to strengthen collaboration in financial services and facilitate moves to list ETFs.
An ETF that tracks Hong Kong’s benchmark Hang Seng Index is in the works, Michael Wong Wai-lun, the city’s deputy financial secretary, said in May. Once ready, the ETF will be listed on the Tadawul Stock Exchange in Riyadh, providing investors in the Middle East with exposure to the markets of China and Hong Kong.
This was preceded by the Hong Kong-listed CSOP Saudi Arabia ETF in November. The ETF tracks 56 Middle East stocks, including the world’s largest company, Saudi Aramco, and has since risen 4.6 percent.
The ETF and a series of financial collaborations between Hong Kong and Riyadh come after Chief Executive John Lee Ka-chiu’s visit to the Gulf country in February 2023.
Following the visit, stock exchange operators Hong Kong Exchanges and Clearing and Tadawul agreed to work together in the areas of fintech, cross-listings and environmental, sustainability and governance disclosure standards.
Hong Kong Monetary Authority CEO Eddie Yue Wai-man has also led several banking delegations to the Middle East since last year, one of which resulted in a deal with the Saudi central bank.
During their recent trip, Leung and Choi met with Emmanuel Givanakis, CEO of Abu Dhabi Global Market Regulator (ADGM), the international financial center and free trade zone in the UAE capital. They discussed ways to expand collaboration between the two parties in asset management.
The SFC has published guidelines on its website to introduce the ADGM to explain how Hong Kong funds could be offered to UAE investors through a funds passport regime.